Regulation (EU) 2021/2116 of the European Parliament and of the Council of 2 December 2021 on the financing, management and monitoring of the common agricultural policy and repealing Regulation (EU) No 1306/2013

TITLE I

SCOPE AND DEFINITIONS

Article 1

Scope

This Regulation lays down rules on the financing, management and monitoring of the common agricultural policy (CAP), and in particular on:

(a) the financing of expenditure under the CAP;

(b) the management and control systems to be put in place by the Member States;

(c) clearance and conformity procedures.

Article 2

Definitions

For the purposes of this Regulation, the following definitions apply:

(a) ‘irregularity’ means an irregularity within the meaning of Article 1(2) of Regulation (EC, Euratom) No 2988/95;

(b) ‘governance systems’ means the governance bodies referred to in Title II, Chapter II, of this Regulation and the basic Union requirements, including Member States’ obligations with regard to the effective protection of the financial interests of the Union referred to in Article 59 of this Regulation as well as the implementation, in accordance with Article 9 of Regulation (EU) 2021/2115, of their CAP Strategic Plans as approved by the Commission, and the reporting system put in place for the purposes of the annual performance report referred to in Article 134 of that Regulation;

(c) ‘basic Union requirements’ means the requirements laid down in Regulation (EU) 2021/2115, in this Regulation, in the Financial Regulation and in Directive 2014/24/EU of the European Parliament and of the Council (¹);

(d) ‘serious deficiencies in the proper functioning of the governance systems’ means the existence of a systemic weakness, taking into account its recurrence, gravity and compromising effect on the correct declaration of expenditure, the reporting on performance, or the respect of Union law;

(e) ‘output indicator’ means an output indicator as referred to in Article 7(1), point (a), of Regulation (EU) 2021/2115;

(f) ‘result indicator’ means a result indicator as referred to in Article 7(1), point (b), of Regulation (EU) 2021/2115;

(g) ‘action plan’ means, for the purposes of Articles 41 and 42 of this Regulation, a plan established by a Member State, on the request of, and in consultation with, the Commission, in the event that serious deficiencies in the proper functioning of the governance systems of that Member State are identified or in the circumstances referred to in Article 135 of Regulation (EU) 2021/2115, containing the necessary remedial actions and the relevant timeframe for its implementation in accordance with Articles 41 and 42 of this Regulation.

Article 3

Exemptions in cases of force majeure and exceptional circumstances

For the purposes of the financing, management and monitoring of the CAP, force majeure and exceptional circumstances may, in particular, be recognised in the following cases:

(a) a severe natural disaster or severe meteorological event gravely affecting the holding;

(b) the accidental destruction of livestock buildings on the holding;

(c) an epizootic, a plant disease outbreak or the presence of a plant pest affecting part or all of the beneficiary’s livestock or crops;

(d) expropriation of all or a large part of the holding if that expropriation could not have been anticipated on the day of lodging the application;

(e) the death of the beneficiary;

(f) long-term professional incapacity of the beneficiary.

TITLE II

GENERAL PROVISIONS ON AGRICULTURAL FUNDS

CHAPTER I

Agricultural funds

Article 4

Funds financing agricultural expenditure

The financing of the various interventions and measures falling under the CAP from the general budget of the Union (‘the Union budget’) shall be made by:

(a) the European Agricultural Guarantee Fund (EAGF);

(b) the European Agricultural Fund for Rural Development (EAFRD).

Article 5

EAGF expenditure

The EAGF shall finance the following expenditure under shared management:

(a) measures regulating or supporting agricultural markets laid down in Regulation (EU) No 1308/2013 of the European Parliament and of the Council (²);

(b) the Union’s financial contribution to interventions in certain sectors as referred to in Title III, Chapter III, of Regulation (EU) 2021/2115;

(c) interventions in the form of direct payments to farmers under the CAP Strategic Plan referred to under Article 16 of Regulation (EU) 2021/2115;

(d) the Union’s financial contribution to information and promotion measures for agricultural products on the internal market of the Union and in third countries which are undertaken by Member States and which are selected by the Commission;

(e) the Union’s financial contribution to the specific measures for agriculture in the outermost regions of the Union laid down in Regulation (EU) No 228/2013 and to the specific measures for agriculture in favour of the smaller Aegean islands laid down in Regulation (EU) No 229/2013.

The EAGF shall finance the following expenditure under direct management:

(a) the promotion of agricultural products either directly by the Commission or through international organisations;

(b) measures taken in accordance with Union law to ensure the conservation, characterisation, collection and utilisation of genetic resources in agriculture;

(c) the establishment and maintenance of agricultural accounting information systems;

(d) agricultural survey systems, including surveys on the structure of agricultural holdings.

Article 6

EAFRD expenditure

The EAFRD shall be implemented under shared management between the Member States and the Union. It shall finance the Union’s financial contribution to the interventions for rural development referred to in Title III, Chapter IV, of Regulation (EU) 2021/2115 as specified in the CAP Strategic Plans and to actions referred to in Article 125 of that Regulation.

Article 7

Other expenditure, including technical assistance

The EAGF and EAFRD may, either on the initiative of the Commission or on its behalf, each directly finance the preparatory, monitoring, administrative and technical support activities, and the evaluation, audit and inspection, required to implement the CAP. That includes, in particular:

(a) measures required for the analysis, management, monitoring, information exchange and implementation of the CAP, including assessing its impacts, environmental performance and progress towards Union targets, as well as measures relating to the implementation of control systems and technical and administrative assistance;

(b) the acquisition by the Commission of satellite data required for the area monitoring system in accordance with Article 24;

(c) the actions taken by the Commission through remote-sensing applications used for the monitoring of agricultural resources in accordance with Article 25;

(d) measures required to maintain and develop methods and technical means for information, interconnection, monitoring and control of the financial management of the funds used to finance the CAP;

(e) the provision of information on the CAP in accordance with Article 46;

(f) studies on the CAP and evaluations of measures financed by the EAGF and EAFRD, including the improvement of evaluation methods and the exchange of information on best practices under the CAP and consultations with the relevant stakeholders, as well as studies carried out with the European Investment Bank (EIB);

(g) where relevant, contribution to executive agencies that are set up in accordance with Council Regulation (EC) No 58/2003 (³) and act in connection with the CAP;

(h) contribution to measures which relate to the dissemination of information, raising awareness, promoting cooperation and exchanging experiences with the relevant stakeholders at Union level, and which are taken in the context of interventions for rural development, including the networking of the parties concerned;

(i) information technology networks focusing on information processing and exchange, including corporate information technology systems, needed in connection with the management of the CAP;

(j) measures required for the development, registration and protection of logos within the framework of the Union quality schemes in accordance with Article 44(2) of Regulation (EU) No 1151/2012 of the European Parliament and of the Council (⁴) and for the protection of intellectual property rights linked to it, and the necessary developments in information technology.

CHAPTER II

Governance bodies

Article 8

Competent authority

Each Member State shall designate a competent authority at ministerial level responsible for:

(a) the issuing, reviewing and withdrawing of accreditation of paying agencies referred to in Article 9(2);

(b) the designation and the issuing, reviewing and withdrawing of the accreditation of the coordinating body referred to in Article 10;

(c) designating and withdrawing the designation of a certification body as referred to in Article 12, and ensuring that there is always a certification body designated;

(d) carrying out the tasks assigned to the competent authority under this Chapter.

Article 9

Paying agencies

With the exception of making payment, paying agencies may delegate performance of the tasks referred to in the first subparagraph.

Each Member State shall, taking into account its constitutional provisions, restrict the number of its accredited paying agencies:

(a) to a single paying agency at national level or, where applicable, one per region; and

(b) to a single paying agency for the management of both EAGF and EAFRD expenditure where paying agencies exist only at national level.

Where paying agencies are established at regional level, Member States shall, in addition, either accredit a paying agency at national level for aid schemes which, by their nature, have to be managed at national level, or confer the management of those schemes on their regional paying agencies.

By way of derogation from the second subparagraph of this paragraph, Member States may maintain the paying agencies which have been accredited before 15 October 2020, provided that the competent authority, by means of the decision referred to in Article 8(2), confirms that they comply with the minimum conditions for accreditation referred to in the first subparagraph of this paragraph.

Paying agencies which have not managed EAGF or EAFRD expenditure for at least three years shall have their accreditation withdrawn.

Member States shall not accredit any new additional paying agency after 7 December 2021, except for cases referred to in the second subparagraph, point (a), where, taking into account the constitutional provisions, additional regional paying agencies may be necessary.

For the purposes of Article 63(5) and (6) of the Financial Regulation, the person in charge of the accredited paying agency shall, by 15 February of the year following the agricultural financial year (‘financial year’) concerned, draw up and provide the Commission with the following:

(a) the annual accounts on the expenditure incurred in the execution of the tasks entrusted to that accredited paying agency, as provided for in Article 63(5), point (a), of the Financial Regulation, accompanied by the requisite information for the clearance in accordance with Article 53 of this Regulation;

(b) the annual performance report referred to in Article 54(1) of this Regulation and Article 134 of Regulation (EU) 2021/2115 showing that the expenditure was effected in accordance with Article 37 of this Regulation;

(c) an annual summary of the final audit reports and of controls carried out, an analysis of the nature and extent of errors and weaknesses identified in governance systems, as well as corrective action taken or planned, as provided for in Article 63(5), point (b), of the Financial Regulation;

(d) a management declaration as provided for in Article 63(6) of the Financial Regulation as to: (i) the fact that the information is properly presented, complete and accurate, as provided for in Article 63(6), point (a), of the Financial Regulation, (ii) the proper functioning of the governance systems put in place, with the exception of the competent authority referred to in Article 8, the coordinating body referred to in Article 10 and the certification body referred to in Article 12 of this Regulation, ensuring that the expenditure was effected in accordance with Article 37 of this Regulation, as provided for in Article 63(6), points (b) and (c), of the Financial Regulation.

The deadline of 15 February referred to in the first subparagraph of this paragraph may be extended on an exceptional basis by the Commission to 1 March, upon communication by the Member State concerned, as provided for in Article 63(7), second subparagraph, of the Financial Regulation.

Where support is provided through a financial instrument which is implemented by the EIB or another international financial institution in which a Member State is a shareholder, the paying agency shall rely on a control report supporting the payment applications submitted. Those institutions shall provide the Member States with the control report.

Article 10

Coordinating bodies

Where more than one paying agency is accredited in a Member State, that Member State shall designate a public coordinating body, to which it shall assign the following tasks:

(a) to collect the information to be provided to the Commission and to send that information to the Commission;

(b) to supply to the Commission the annual performance report referred to in Article 54(1) of this Regulation and Article 134 of Regulation (EU) 2021/2115;

(c) to take or coordinate actions with a view to resolving any deficiencies of a common nature and to inform the Commission of any follow-up;

(d) to promote and, where possible, ensure the harmonised application of Union rules.

Article 11

Commission powers relating to paying agencies and coordinating bodies

The Commission is empowered to adopt delegated acts in accordance with Article 102 to ensure the sound operation of the paying agencies and coordinating bodies provided for in Articles 9 and 10, supplementing this Regulation with rules on:

(a) the minimum conditions for the accreditation of the paying agencies referred to in Article 9(2), first subparagraph, and for the designation and accreditation of the coordinating bodies referred to in Article 10;

(b) the obligations of the paying agencies as regards public intervention, as well as the rules on the content of their management and control responsibilities.

The Commission shall adopt implementing acts laying down rules on:

(a) the procedures for issuing, withdrawing and reviewing accreditation of paying agencies and for designation and issuing, withdrawing and reviewing accreditation of coordinating bodies, as well as the procedures for the supervision of the accreditation of paying agencies;

(b) the arrangements and procedures for the checks underlying the management declaration of the paying agencies referred to in Article 9(3), first subparagraph, point (d), as well as its structure and format;

(c) the functioning of the coordinating body and the submission of information to the Commission in accordance with Article 10.

Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 103(3).

Article 12

Certification bodies

A Member State that designates more than one certification body may appoint a public certification body at national level to be responsible for coordination.

For the purposes of Article 63(7), first subparagraph, of the Financial Regulation, the certification body shall issue an opinion, drawn up in accordance with internationally accepted audit standards, which shall establish whether:

(a) the accounts give a true and fair view;

(b) the Member States’ governance systems put in place function properly, in particular: (i) the governance bodies referred to in Articles 9 and 10 of this Regulation and Article 123 of Regulation (EU) 2021/2115, (ii) the basic Union requirements, (iii) the reporting system put in place for the purposes of the annual performance report referred to in Article 134 of Regulation (EU) 2021/2115;

(c) the performance reporting on output indicators for the purposes of the annual performance clearance referred to in Article 54 of this Regulation and the performance reporting on result indicators for the multiannual performance monitoring referred to in Article 128 of Regulation (EU) 2021/2115, demonstrating that Article 37 of this Regulation is complied with, is correct;

(d) the expenditure for the measures laid down in Regulations (EU) No 228/2013, (EU) No 229/2013 and (EU) No 1308/2013 and in Regulation (EU) No 1144/2014 of the European Parliament and of the Council (⁵) for which reimbursement has been requested from the Commission is legal and regular.

That opinion shall also state whether the examination calls into question the assertions made in the management declaration referred to in Article 9(3), first subparagraph, point (d). The examination shall also cover the analysis of the nature and extent of errors and weaknesses identified in governance systems by audit and controls, as well as corrective action taken or planned by the paying agency, referred to in Article 9(3), first subparagraph, point (c).

Where support is provided through a financial instrument which is implemented by the EIB or another international financial institution in which a Member State is a shareholder, the certification body shall rely on the annual audit report drawn up by the external auditors of those institutions. Those institutions shall provide the Member States with the annual audit report.

The implementing acts shall also set out:

(a) the audit principles on which the opinions of the certification bodies are based, including an assessment of the risks, internal controls and the level of audit evidence required;

(b) the audit methods to be used by the certification bodies, having regard to international standards on auditing, to deliver their opinions.

Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 103(3).

Article 13

Exchange of best practices

The Commission shall promote the exchange of best practices between the Member States, in particular as regards the work of the governance bodies under this Chapter.

TITLE III

FINANCIAL MANAGEMENT OF THE EAGF AND EAFRD

CHAPTER I

EAGF

Section 1

Budgetary discipline

Article 14

Budget ceiling

Article 15

Compliance with the ceiling

Article 16

Agricultural reserve

The appropriations for the reserve shall be entered directly in the Union budget. Funds from the reserve shall be made available, in the financial year or years for which additional support is required, for the following measures:

(a) measures to stabilise agricultural markets under Articles 8 to 21 of Regulation (EU) No 1308/2013;

(b) exceptional measures under Articles 219, 220 and 221 of Regulation (EU) No 1308/2013.